The Art of standards war — Lessons from history (WiFi vs. HomeRF, NACS vs. CCS, Windows vs. Linux)
‘Can we develop general hypotheses for determining winning strategies between open and proprietary standards?’. This question fueled my 50+ hour research project, exploring some of the most pivotal standards wars over the past 45 years. Though I couldn’t fully answer the question of creating a definitive framework, my analysis revealed common themes and insights. Based on three historical case studies, I’ve synthesized five ‘broad hypotheses’ and questions to guide strategic thinking. I believe these hypotheses and questions offer investors and entrepreneurs a practical framework to navigate standard wars and strategize in competitive markets.
The article follows this structure:
- A summary section with key questions for evaluating startups involved in a standards war & Hypotheses
- Three historical case studies on standards wars with key learnings
- Broad hypotheses derived from these case studies
- Testing these broad hypotheses with another historical case study
- A brief conclusion
Summary:
Key considerations when evaluating startups during a standards war
1. Assessing Technical Superiority and Innovation Pace — Does one standard offer 3X -10X more value than the other standard? Is there a clear technological differentiation between one standard and another? How do both standards compare in terms of costs, performance, reliability, and scalability?
2. Evaluating Consumer Experience and Adoption — Does the value proposition of one standard resonate with the end consumers? Which of those value propositions is most important to the end consumers? Does any of those value propositions enhance their overall use experience?
3. Securing Early and Influential Partnerships — Do key industry players adopt the standard? Why do they adopt? What are the top 2–3 core value propositions influence their decision?
4. Building an Ecosystem and Brand — What steps does the parent organization of the standard take to foster an ecosystem and build a brand? How critical is ecosystem building in getting the majority of consumers/companies in the market to adopt the standard? Is there a positive network effect in action(i.e., incremental positive value added for all major stakeholders and consumers who adopt the standards)?
5. Understanding the Regulatory Environment — How does the regulatory landscape impact the adoption of one standard vs. another? Are there emerging regulatory trends that can tilt the market adoption in favor of one standard?
Summary of Hypotheses:
1. Technical Superiority could determine the winner
2. Standards that offer value propositions aligned with consumer needs and enhance their overall product experience are more likely to emerge as the winner.
3. Early support from major industry players is critical for a standard’s widespread adoption.
4. A strong ecosystem and brand are key to sustaining market leadership beyond initial technical advantages.
5. Regulatory support or opposition can heavily influence the adoption and success of a standard.
Case Study 1 — The Wireless Standard War: WiFi vs HomeRF
In 1985, the Federal Communications Commission (FCC) allowed unlicensed use of the ISM (Industrial, Scientific, and Medical) bands for wireless LANs and mobile communications. This regulatory support enabled the rapid development and deployment of Wireless technologies without the need for cumbersome licensing processes. As technology advanced in the early 2000s, the demand for connecting devices without wires became increasingly apparent. People wanted the freedom to access the internet, share files, and communicate with others from anywhere in their homes or offices without being tethered to a specific location by cables. Wireless communication offered this freedom, making it possible to connect devices like computers, phones, and printers over the air.
In the late 1990s and early 2000s, multiple wireless networking technologies were competing for dominance in the consumer and enterprise markets. The main contenders were:
1. Wi-Fi (IEEE 802.11): An open standard developed by the Institute of Electrical and Electronics Engineers (IEEE). Wi-Fi was initially intended for local area networking (LAN) in homes and businesses. Wi-Fi standard was introduced in 1997.
2. HomeRF: A proprietary standard developed by a consortium of companies including Intel, Compaq, and Siemens. It was designed for short-range wireless communication, particularly for home networking. HomeRF standard was introduced in 1998.
3. Bluetooth: Another open standard, but with a different focus — short-range, low-power communication between devices. Bluetooth was aimed at connecting peripherals like keyboards, mice, and headsets. Bluetooth was introduced in 1999.
4. HiperLAN: A European standard developed by the European Telecommunications Standards Institute (ETSI). It was similar to Wi-Fi but had more stringent performance requirements. HiperLAN was introduced in 1996.
Few have heard of HomeRF or HiperLAN today. Wi-Fi has become almost synonymous with wireless networking. I also asked some of my more experienced colleagues from Silicon Valley if they had heard of HomeRF, and only a few said yes. Bluetooth was perfect for low-power, short-range communication between devices but was not suited for internet connectivity. HiperLAN was not getting enough commercial traction as a WiFi (IEEE 802.11) Standard. So, in the initial years, the main competition was between HiperLAN and IEEE 802.11, which we know now that WiFI won. So, how did WiFi win the standards war as the de facto standard for Wireless communication?
- Technical superiority
Wi-Fi outperformed HiperLAN in key areas such as scalability (the number of devices connected at any time), interference (think of poor signal quality and lower data rates), speed (data rates), and reliability (the stability of connection). The IEEE 802.11g version of WiFi provided higher data rates (54 Mbps) compared to HomeRF 2.0's 20 Mbps data rate. Technologically, Wi-Fi and HiperLAN had different approaches. Wi-Fi utilized Direct Sequence Spread Spectrum (DSSS) and Orthogonal Frequency Division Multiplexing (OFDM), which made it more robust against interference compared to HiperLAN. HiperLAN, using Time Division Multiple Access (TDMA), did not achieve the same level of scalability and was more susceptible to interference in environments with multiple overlapping networks. Additionally, Wi-Fi offered backward compatibility with older standards like 802.11b, facilitating smoother transitions to higher speeds without requiring entirely new infrastructure. - Winning early influential adopter
Being a superior product and wireless networking protocol, Wi-Fi’s adoption was marked by several pivotal moments. Apple was an early adopter, integrating Wi-Fi into their iBook product line in 1999. Intel followed with the launch of its Centrino platform in 2001, which brought Wi-Fi to a wider range of laptops. Cisco Systems, a major player in networking, acquired Radiata in 2000 — a company developing Wi-Fi chipsets — and began integrating Wi-Fi into their enterprise networking solutions. After the IEEE 802.11g standard was released in 2003, major consumer electronics brands like Sony, Nintendo, and Microsoft started incorporating Wi-Fi into their gaming consoles, cameras, and other consumer electronics, expanding Wi-Fi’s reach into the entertainment and home electronics markets. - Ecosystem Development & network effects
The initial adoption by key technology players in the industry created a positive feedback loop: the more devices that supported Wi-Fi, the more attractive it became for other manufacturers to integrate it into their products, leading to even greater consumer demand. This positive Network effects led to a crucial role in the broad industrial adoption of Wi-Fi, from consumer electronics to enterprise solutions. - Building a Brand & Business Trust
The Wi-Fi Alliance, established in 1999, started offering certification and interoperability programs that built trust in the technology, ensuring its reliability and widespread support for both consumers and enterprises.
Case Study 2— EV Charging Standard War: North American Charging Stanard (NACS) vs Combined Charging Standard (CCS)
The electric vehicle (EV) market has grown rapidly over the past decade across the globe. In 2024, 8% of all new vehicles in the US and 40% of all new vehicles are electric. In 2014, the EV market for the US and China was ~1% market penetration. In the US, Some of the key hindrances to EV adoption are Price, Range Anxiety, & Charging Infrastructure (Availability of public chargers, their availability, reliability, and charging speed). EV charging standards define the technical specifications, including connectors, communication protocols, and power levels, that ensure EVs can safely and efficiently interface with charging infrastructure connected to the grid. Charging standards especially have implications on charging speed(how fast the vehicle can be charged), reliability(reducing communication errors between EVs and chargers), and payment experience for the end consumers.
There were two primary contenders in the US—standards vying for market dominance in charging infrastructure. The North American Charging Standard (NACS) was introduced by Tesla in 2012 for its supercharger network, and the Combined Charging System (CCS) was introduced in 2011 by a consortium of European and American automakers. The key thing to note here is that CCS was an open standard approach, whereas NACS was Tesla's proprietary standard. In our previous case, we saw that IEEE's Open protocol approach won against HomeRF. However, we see Tesla’s proprietary standard getting more adoption after it opened it to other automakers.
So, how did Tesla win the charging standard war?
- First-mover advantage and market leadership
Tesla capitalized on its first-mover advantage by heavily investing in its Supercharger network early on. Of the ~43,000 DC fast charger ports in the US, Tesla owns ~25,500 (~60% of the market) to date. - Technology Superiority and Reliability
Tesla’s Superchargers are renowned for their superior design — smaller size, faster charging times (900A vs. 500A for CCS), lighter weight, and high reliability. In early 2023, only 4% of Tesla owners reported charging failures, compared to 21% of EV owners using other public chargers. Tesla’s vertical integration and control over the entire product lifecycle allow for rapid optimization and innovation without reliance on external suppliers or third parties. NACS’s reliability, with faster charging and a user-friendly experience, cemented Tesla’s leadership in EV charging technology. - Strategic Partnerships — First pivotal moment
In 2022, Tesla opened up its supercharging networks (NACS) for other automakers, and since then, it has seen adoption from all top 10 major auto OEMs (General Motors (GM), Toyota, Ford, Hyundai-Kia, American Honda, Stellantis, Nissan Group, Subaru, Tesla, Volkswagen Group). This strategic decision was the first pivotal moment for NACS adoption. - Federal Support — Second pivotal moment
In July- 2023, the U.S. Federal government, seeing that the availability of charging infrastructure was the key problem that needs to be addressed for broader EV adoption, announced that NACS-compatible chargers would be eligible for billions of dollars of federal subsidies, provided they included CCS compatibility, significantly bolstered Tesla’s position. Tesla announced that their Charge points are able to reverse interoperable with CCS charge ports. This alignment with federal infrastructure goals was the key pivotal point when the auto industry recognized that Tesla won the EV charging standards war.
Case Study 3— Operating System Standard War: Windows (Microsoft) vs Linux (Linux Foundation)
Linux is an open-source operating system (OS) developed in 1991 by Linus Torvalds. Almost 40% of embedded systems (from game consoles to microwave ovens ) are Linux-based (source — EE Times, 2019). Nearly a third of web servers are also based on it(source — W3Techs, 2021). Approximately 80% of smartphones (i.e., all those on Android, source — StatCounter Global, 2020) and ~90% of workloads on public cloud platforms, such as applications, business databases, and virtual machines, are built using Linux. But, if you look at the personal computer market share, Linux only owns ~4.5%, whereas Windows own ~72% of the market share(source — Techradar, 2023). Over the last 50 years, Linux has a developed reputation for being stable, secure, and customizable in the developer community. So how was Microsoft able to win the OS Standards War Against Linux for the Desktop Market?
Microsoft’s victory over Linux in the desktop market resulted from a multifaceted strategy that leveraged its existing ecosystem, partnerships, and user-centric innovations. The following key factors played a significant role in Microsoft’s success:
- Enhancing Product Integration and User Experience
The first thing that Microsoft exceptionally did well was leveraging its existing distribution channel and access to customers to redesign the Graphical user interface(GUI) to be more intuitive for Desktop computers so that people with less technical skills can get maximum utility out of computers. Having access to end consumers made them innovate new features based on customer feedback. Linux, since it is an open-source software, needed more coordinated effort to redesign the GUI for average non-technical end consumers. On the technical front, Microsoft also puts a lot of emphasis on tight integration between Windows and other enterprise software offerings(the Office suite, Internet Explorer, Adobe suite, Teams, Chrome). - Creating Strategic Partnerships and Alliances
The second thing that stuck out to me about Microsoft’s strategy was its emphasis on forming strategic partnerships with hardware manufacturers, software vendors, and other service providers to strengthen its ecosystem and limit Linux’s market penetration. For example, Microsoft made deals with leading computer manufacturers like IBM, Dell, and HP to pre-install Windows on their devices. This meant that nearly every PC sold came with Windows. This is such a genius move. Think about this. Most of us started using computers in our teen years. Would teens know deep enough about computer Software to know that there is an alternative free Operating system called Linux? (definitely, I didn’t) Even if they knew, would they take the extra effort to uninstall Windows and reinstall Linux? (Not many, in my opinion). Microsoft also worked closely with companies like Adobe, Oracle, and SAP to ensure their software was optimized for Windows. This collaboration ensured that critical business applications ran smoothly on Windows, making it the enterprise's preferred choice. - Fostering a Strong Developer Ecosystem
Suppose you are familiar with a tech stack for any software product. You would notice that the operating system sits at the very bottom, and every other application is built on top of it. As an operating system provider, Microsoft needs to make sure that the 3rd party application providers (think of game developers, Google Chrome, WhatsApp web, or any engineering tools software such as AutoCAD, Ansys, or even programming tools such as R) develop their desktop applications to work well for windows. Microsoft invested heavily in supporting and incentivizing developers to create software exclusively for Windows by Launching comprehensive development tools and frameworks such as Visual Studio, Providing extensive documentation, support, and training programs for developers, and even offering financial incentives for developers. - Pricing bundling and Tiered Licensing model
Most of you reading this would be familiar with how Microsoft offers free/ low-cost versions of Windows for educational purposes and some developing markets to build early loyalty. Microsoft adjusted its licensing and pricing structures to counter Linux’s free and open-source nature to be more competitive and attractive to different market segments. For example, for their enterprise customers, Microsoft offers bundled services(e.g. customers just pay for the Office Suite, teams, SharePoint, Azure, and other Microsoft services while Windows are free of charge) and support packages to enhance business value propositions. The availability of support is a huge differentiation and moat for Microsoft, as their enterprise customers now don’t have to worry about training or maintenance with Microsoft software products.
Broad Hypotheses
Overall, my learning from these 3 case studies, these are the top 5 hypotheses I came up with,
1. The Pace of Innovation
During the initial years, when two or three standards try to dominate the market, the key thing to watch out for is the pace of Innovation at which each standard evolves into its next version and how it adds value to the overall ecosystem and the industry. Technical Superiority could determine the winner.
Hypothesis 1— ‘Technical Superiority could determine the winner’
2. Emphasis on end consumer experience
Prioritizing user experience is the key. Whether it’s Tesla’s focus on reliability and ease of payments, Windows’ user-friendly GUI, or Wi-Fi’s scalability and reduced interference, the two or three criteria that the end consumers care the most about could be the decisive factor in which standard can win and gets adopted in the market.
Hypothesis 2— ‘Standards that offer value propositions aligned with consumer needs and enhance their overall product experience are more likely to emerge as the winner.’
3. Early adoption by key players in the market
Forming early alliances with key industry players can significantly impact a standard’s broad market adoption and success. Wi-Fi’s early backing from Apple and Intel, Windows’ hardware partnerships with HP and Dell, and Tesla’s strategic timing in opening its Supercharger network to all OEMs are great examples from history.
Hypothesis 3— ‘Early support from major industry players is critical for a standard’s widespread adoption.’
4. Build an Ecosystem and build a Brand to sustain market leadership
Though from these examples, we see that the key to broad market adoption for standards starts with technical superiority and then getting adoption from a couple of majority players in the industry, the broad market adoption did not occur until these organizations took active measures to build an ecosystem around it’s standard. For example, IEEE worked with WiFi Alliance for certification programs, and Microsoft built its Developer network community, which are all good examples of this.
Hypothesis 4— ‘A strong ecosystem and brand are key to sustaining market leadership beyond initial technical advantages.’
5. Regulatory environment can impact the adoption of winning standard
Regulatory support or opposition can significantly influence the adoption of a standard. In the case of Tesla, we saw how the timing of their opening their supercharger network to other OEMs helped them garner support from the federal government for funds to build its supercharger network a year later. In Microsoft’s case, though this was not discussed earlier in the article, the market share for Desktop OS would have evolved very differently if not for the US government’s lawsuit against Microsoft in 1994 for its monopoly in the web browser market in Windows. Microsoft invested $150M in Apple in 1997, and the rest is history. Apple OS currently owns ~15% of the desktop OS market. Both of these cases go on to point out why it’s important to be aware of what’s happening in the regulatory landscape while evaluating the adoption of standards in the market.
Hypothesis 5— ‘Regulatory support or opposition can heavily influence the adoption and success of a standard.’
Testing my Hypotheses
I decided to test my hypotheses on historical standards wars to see if they hold true. My initial options included Alternating Current (AC) vs Direct Current (DC), Betamax vs VHS, Internet Explorer vs Netscape, and NVIDIA CUDA vs OpenCL. While the CUDA vs OpenCL battle is intriguing, I believe it’s too early to test as the war is still unfolding.
AC vs DC offers insights into interoperability, while Internet Explorer vs Netscape highlights channel access and platform strategy. Although I initially knew less about the Betamax vs. VHS battle, after conducting more research, I found it to be a compelling case study to test my hypotheses.
Context
The Betamax vs. VHS standards war was a pivotal moment in the history of home video recording technology. Betamax, developed by Sony along with Matsushita (which became Panasonic) released the Betamax in 1975. Shortly after, JVC (Japan Victor Company) introduced its VHS (Video Home System) in the late 1970s at a lower price, sparking a full-scale format war.
Videotape Standard war: Betamax vs. VHS Analysis
1. Pace of Innovation:
Hypothesis tested — ‘Technical Superiority could determine the winner’
Betamax was technically superior in terms of video quality(could reproduce colors better), tape durability and even smaller in size. Compared to VHS which is simpler and cheaper to produce, Betamax could playback and fast-forward quicker and boasted a nifty trick that enabled “bookmarking” certain parts of their tapes. However, VHS offered longer recording times, which appealed more to consumers who wanted to record entire movies or sports events. Hands down, Betamax was technically superior product than VHS. So, how did VHS won the standard war for videotapes?
2. Consumer Experience:
Hypothesis tested — ‘Standards that offer value propositions aligned with consumer needs and enhance their overall product experience are more likely to emerge as the winner.’
Even though Betamax is a technically superior product compared to VHS in terms of video quality, durability, and compactness of its design, VHS videotapes offered three things that end consumers valued the most — longer recording times, lower cost, and interoperability. Betamax technology was only compatible with other sony products. JVC also did not acquire patents for their VHS technology, allowing their video format to really flourish. Aligning their value proposition with what the majority of end consumers value the most ultimately allowed VHS to win the standards war.
“When Betamax hit the home video market, its videocassette tapes could record only an hour’s worth of programming. On the other hand, VHS tapes allowed people to record for two hours. Later, VHS made it possible to record for four to six hours. This helped the VHS become the go-to format for home video recording and watching movies.” (source)
3. Early Partnerships:
Hypothesis tested — ‘Early support from major industry players is critical for a standard’s widespread adoption.’
Video rental stores, such as Blockbuster, predominantly stocked VHS tapes due to their longer recording times and affordability than Betamax. VHS had the advantage of being supported by major Hollywood studios, which were willing to release their films on VHS tapes.
4. Ecosystem and Brand:
Hypothesis tested — ‘A strong ecosystem and brand are key to sustaining market leadership beyond initial technical advantages.’
By partnering with key stakeholders like Hollywood studios, rental stores like Blockbuster, and manufacturers, VHS created a cycle where content availability, consumer demand, and distribution strengthened its position. As more consumers bought VHS, its market share grew, allowing VHS to benefit from economies of scale and offer lower prices. This reinforcing cycle made VHS more attractive to both consumers and studios, which chose VHS as the preferred format. This ecosystem-building was essential in securing VHS’s market leadership.
5. Regulatory Environment:
Hypothesis tested — ‘Regulatory support or opposition can heavily influence the adoption and success of a standard.’
Regulation did not play a significant role in this battle, market dynamics and consumer preferences were the primary factors for VHS’s success.
Conclusion:
One of my key hypotheses about technical superiority was proven false in this analysis. The takeaway for me is that developing a generalizable hypothesis that applies to all situations is challenging, as each industry and standards war has its own nuances. If you’re an investor, I believe these hypotheses and questions can help you better evaluate startups and standards when considering investment opportunities. If you’re an entrepreneur, these questions and hypotheses can guide you in focusing on what to prioritize at each stage of your company and how to allocate resources effectively.
References:
1. WiFi Case study
Journal Paper — Evolution and Impact of Wi-Fi Technology and Applications: A Historical Perspective
Online discussion — Network world Faceff — Home RF vs 802.11(Recommend reading this)
Book — The Innovation Journey of Wi-Fi, The Road to Global Success by
Cambridge University Press (Recommend reading this)
Research Paper — A Detailed Study on Wireless LAN Technologies by Vijay Chandramouli (Recommend reading this)
2. Tesla Case study
Article — How Tesla Won the Standards War
Article — Tesla’s Supercharger Network secured NACS’ widespread adoption
Article — It’s official: Tesla has won the charging wars
Article — Tesla Wins EV Charging! Now What?
Article — Tesla may have already won the charging war
3. Microsoft Case Study
Blog — Halloween Document I (Version 1.17) (Recommend reading this)
Article — OS Wars: Why has Microsoft Embraced Linux?
Article — Watch out Windows — Linux market share could hit a major milestone soon
Article — The Most Important Turning Points in Microsoft’s History
4. Betamax Vs. VHS
Blog — Betamax vs. VHS History: The Videotape Format War
5. Other references
The art of Standards war by Carl Shapiro and Hal R. Varian — The title of this article was inspired by this paper by Carl Shapiro and Hal R. Varian. While their analysis is insightful, the case studies in that paper are outdated. This prompted me to conduct my own research and develop new hypotheses on standards wars. Upon comparing my findings with Shapiro and Varian’s work, I found significant overlap, but my article also offers original contributions, particularly around ecosystem development and the importance of securing early partnerships.
Book — Information Rules by Carl Shapiro and Hal R. Varian
Appendix — Paintings that I find related to the theme of this article
